London Gold Market Report

THE PRICE OF PHYSICAL GOLD jumped in US Dollars for the third session running
early Monday in London, recording the best AM Gold
Fix since Feb. 24th at $987 per ounce.

Stock markets also leapt worldwide - up more than 3.0% in Frankfurt - while
commodities added to last month's 34-year record gains.

The US Dollar fell against all other currencies. Long-dated government bonds
also fell, pushing interest rates higher.

"We believe in a Strong
Dollar," said US Treasury secretary Tim Geithner to students at Peking
University this weekend, "and we're going to make sure that we repair and
reform the financial system so that we sustain confidence."

Geithner's speech was greeted with laughter according to the London Times.

"Chinese assets [held in Dollars] are very safe," he went on. "We're committed
to bringing our fiscal deficits down over time to a sustainable level."

Today General Motors filed for bankruptcy protection, with $30 billion of
government money ear-marked for restructuring the auto giant.

GM has already received $20 billion of tax-funded aid.

Economists at Barclays Capital in New York are meantime urging the US Federal
Reserve to hike its "Quantitative
Easing" of long-term interest rates, Reuters reports, creating three times
its planned £300bn of new money to bid up government bonds and push longer-term
yields lower.

The Treasury needs to sell a record $2 trillion in new US bonds this year
to fund the shortfall between its spending and tax receipts.

"We see the $1000 level [in Gold] as the next obvious target from here," says
the daily note from London market-makers Scotia Mocatta.

"The bullish picture for bullion is confirmed by the weekly candlesticks which
have seen four consecutive up weeks for gold."

But it will be "interesting" to watch for "bouts of liquidation" in Gold
Investment as the price approaches $1,000 says another London dealer.

"It is worth noting that speculators on Comex are now very long," says UBS
analyst John Reade, quoted by Dow Jones, "and with no sign of strong inflows
into the ETFs, the
Dollar must weaken further for gold to make more ground."

Jumping 11% to the greatest level since July '08, the "net long" position
in Gold Futures held
by hedge funds and other large speculative players rose for the fifth week
running in the week-to-last Tuesday.

Speculative gold buying on the futures market, however, remains one-seventh
below the record peak hit in January last year, according to data from US regulator
the CFTC.

"It's the highest quality asset of all. It's about permanence of long-term
value. [Gold's] relative value through time is constant."

Monday morning saw the US Dollar fall through $1.42 per Euro for the first
time in 2009.

The Euro gold price touched its best level in 5 weeks at €697 an ounce,
but for Sterling investors now Ready
to Buy Gold, the price fell as the Pound soared, dropping 0.8% from last
week's close at £605 as the UK currency broke new 8-month highs above
$1.64.

When the Pound traded at $1.64 in Jan. 2000, the UK Gold
Price stood at £175 an ounce. It rose to £220 when Sterling
next reached that level in Jan. 2003, and rose further to £230 an ounce, £475
and now above £600 as GBP/USD crossed that price again.

"We do not believe the IMF
Gold Sales, should they occur, will harm Gold
Prices," said HSBC analyst James Steel last Friday, referring to the
possible approval of a 400-tonne sale by the International Monetary Fund.

The United States retains a 17% controlling vote in the IMF. Congressional
approval may be sought this week.

Dollar-price gains were meantime also strong Monday morning across the commodities
market, with copper breaking above $5,000 per tonne and crude oil adding 2.4%
to $67.85 per barrel.

Russia's RTS stock market jumped almost 6%, while the Polish Zloty added nearly
2% vs. the Euro on the currency markets on news that Poland's industrial output
shrank at a slower pace in May from April.

Operating profits at Australian corporations fell 7.2% in the first quarter
from the end of 2008, new data showed, while cash earning for Japanese workers
shrank 2.5% month-on-month in April.

Eurozone manufacturing sentiment improved in May on the PMI index, and rose
sharply in the UK.

China's manufacturers reported the third month running of increased output.

Formerly City correspondent for The Daily Reckoning in London and head of
editorial at the UK's leading financial advisory for private investors, Adrian
Ash is the head of research at BullionVault,
where you can buy gold
today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

About BullionVault

BullionVault is the
secure, low-cost gold and silver exchange for private investors. It enables
you to buy and sell professional-grade bullion at live prices online, storing
your physical property in market-accredited, non-bank vaults in London, New
York and Zurich.

By February 2011, less than six years after launch, more than 21,000 people
from 97 countries used BullionVault,
owning well over 21 tonnes of physical gold (US$940m) and 140 tonnes of physical
silver (US$129m) as their outright property. There is no minimum investment
and users can deal as little as one gram at a time. Each user's unique holding
is proven, each day, by the public reconciliation of client property with formal
bullion-market bar lists.

BullionVault is a
full member of professional trade body the London Bullion Market Association
(LBMA). Its innovative online platform was recognized in 2009 by the UK's prestigious
Queen's Awards for Enterprise. In June 2010, the gold industry's key market-development
body the World Gold Council (www.gold.org)
joined with the internet and technology fund Augmentum Capital, which is backed
by the London listed Rothschild Investment Trust (RIT Capital Partners), in
making an $18.8 million (£12.5m) investment in the business.

Please Note: This article is to inform your thinking, not lead it.
Only you can decide the best place for your money, and any decision you make
will put your money at risk. Information or data included here may have already
been overtaken by events - and must be verified elsewhere - should you choose
to act on it.